McKinsey & Company have released a Coronavirus update on ‘The State Of Fashion 2020’ and Fashion Intern has summarised the key points to help make sense of the current issues the industry faces and what the future holds.
Consumer priorities have shifted
Fashion’s outlook has become dramatically and suddenly bleaker and is now an industry on red alert. The sudden freeze on consumer spending is disrupting the supply-side crisis. With lockdown forcing people to stay at home and stores to close, consumer instinct is to prioritise necessary goods such as food and household items over clothing and personal items which has consequently depleted cash reserves. If stores remain closed for a further two months then approximately around 80% of fashion companies in Europe and North America will be in financial distress and for the workers in fashion manufacturing hubs such as Bangladesh, India, Cambodia, Honduras and Ethiopia extended periods of unemployment increases the risk of hunger and disease.
There will be a continued ‘lull’ in spending
Undoubtedly fashion is to face a recessionary market once the dust has settled and life returns back to some normalcy. McKinsey expects “a period of recovery to be characterised by a continued lull in spending and a decrease in demand across channels.”
Discounts are the way forward
For brands to succeed, a discount mindset is imperative to drive in “cash-strapped consumers back to the store.” Brands will need to tailor future discounting strategies by aligning promotions and reinforcing value to make buying worthwhile for consumers to shop at full price. It is said in “Europe and the US, more than 65% of consumers expect to decrease their spending on apparel.”
It will all be about ‘investment pieces’
When looking at consumer behaviour after the 2008 financial crisis, it looks as though the luxury sector will have a good chance as consumers are expected to return more quickly to paying full price for quality, timeless goods. Many consumers will be looking for so-called “investment” pieces- minimalist, last forever items, that feel more responsible given the state of the world.
Digital is an urgent priority
Everything has turned to online and this has elevated digital as an urgent priority to reach the mass market. Consumers now expect to spend more online in light of the Covid-19 outbreak. Therefore brands should take the opportunity to become not just more digitally adept, but to become digital frontrunners.
Sustainability credentials will gain consumers trust
The coronavirus provides the opportunity to reassess the values by which we measure our actions. “Consumers will develop a growing antipathy toward waste-producing business models and heightened expectations for purpose-driven, sustainable action”
China will lead the pack
Now that China has passed the peak of its outbreak, western countries now have a playbook to follow.
Read the full report here:
https://www.mckinsey.com